Ele.me launches a fierce attack on instant retail

Author | Liu Baodan

Editor | Zhou Zhiyu

Instant retail has become a battleground for e-commerce companies. Alibaba has also launched a fierce attack on this market through its local life platform, Ele.me.

Recently, Ele.me CEO Han Liu officially announced the plan for nearby brand flagship stores, aiming to boost merchant sales growth. Ele.me revealed that they plan to open 100,000 official flagship stores in the next 3 years.

According to Wall Street News, this project underwent two years of internal exploration before being finally launched to the market.

The flagship store plan is Ele.me's latest strategic project, with a clear goal of vigorously developing the instant retail business. This marks Ele.me's second growth curve exploration.

Over the past year, Alibaba has made it clear through structural separation that each of its businesses must independently face market competition. For Ele.me, Alibaba is firmly committed to investing. Therefore, Alibaba repeatedly denied rumors of acquiring Ele.me at the end of last year.

However, Alibaba has also raised higher requirements for Ele.me, expecting continuous improvement in efficiency and monetization within the next one to two years, significantly reducing losses to achieve a balance between profit and loss.

With pressure to reduce losses and break through to profitability, Ele.me must find a balance between business expansion and cost control. In this context, Ele.me has undergone a series of adjustments.

At the end of March, the Chairman of the Local Life Group and CEO of Ele.me, Yu Yongfu, stepped down from his management position. The CTO of the Local Life Group, Wu Zeming, and the head of Hummingbird Delivery, Han Liu, respectively took over as Chairman and CEO of Ele.me, smoothly completing the transition of the new and old management teams.

Strategically, Ele.me clarified at the "Hundred-Person Team" meeting that the long-term strategic track is "1+2", where "1" represents the healthy growth of the home dining platform, and "2" represents the two new tracks of the second growth curve, namely instant retail and instant logistics network.

Behind this is the difficulty for food delivery services to be profitable. For example, Meituan's profit model is mainly based on the traffic brought by food delivery, achieving profit growth through online businesses such as in-store services and travel. From this perspective, it is expected that Ele.me, eager to be profitable, would choose to focus on instant retail.

The latest report from the Market Research Institute of the Ministry of Commerce shows that by 2023, the order volume of the domestic instant delivery industry is about 40.9 billion orders, a year-on-year increase of 22.8%, and the market size of instant delivery is 341 billion yuan, a year-on-year increase of 24.8%.

Currently, the instant e-commerce industry continues to maintain high compound growth, with an average annual growth rate exceeding 30%. It is estimated that by 2027, the market size of instant e-commerce will exceed 5 trillion yuan.

Hu Qiugen, Senior Vice President of Ele.me and head of the local retail business, stated that the platform strategically invests in instant retail and firmly does not compete with merchants for profits in the supply chain. Based on this, Ele.me has launched the nearby brand flagship store plan.

Currently, Ele.me's new format of brand flagship stores can better connect with consumers, achieve online and offline integrated operations, and become an important solution for retail brands to embrace change.

According to Chen Yanfeng, Vice President of Ele.me and head of the retail brand and supermarket convenience industry, official flagship stores can provide direct services to consumers, simplify channel circulation, improve channel profitability, and bring sustainable growth For instant retail, in addition to its own delivery capabilities, Ele.me can also leverage the resources of Alibaba Group. For example, Ele.me will collaborate with Taobao, Alipay, Amap, and other platforms to break through the time and space constraints of instant retail fulfillment.

The challenges are also evident, as Meituan, JD.com, and others are intensifying their efforts in the instant retail sector. These competitors have clear advantages in logistics and delivery, undoubtedly putting pressure on Ele.me.

After the battles of group buying and food delivery, Ele.me will need to make a strong effort to stand out in the instant retail arena